DOW .. Down ..Down.. Up ..Up...
Again, many of my friends are asking me if I am selling my stock as the market seems very volatile and 'risky" ( for them ), but my answer to them is the same, "No", I am not selling but just do some "portfolio reshuffling " on some of my holdings ( which I will update more in my next Dividend and Portfolio Update). In view of such "crazy market ", some might be thinking of getting out of the market and holding 100% in cash. I am not so sure if this is a wise move, of course, if one could avoid the "40 days with biggest losses" from the market, he/she could really achieve an "extraordinary" result, but in reality, can we really do that? A big question mark.
Missing the Best and Worst Days (from IFA.com)
"University of Michigan Professor H. Nejat Seyhun analyzed 7,802 trading days for the 31 years from 1963 to 1993 and concluded that just 90 days generated 95% of all the years’ market gains — an average of just three days per year.
"Psychological create 90% of the market "
|image credit to jasonzweig.com|
One shouldn’t make a “sudden or panic” move, investing in stocks rewards you in the long term and these day-to-day changes in the market shouldn’t affect you. Stretch your investing horizon and understand that “volatility “ is just merely a characteristic of Mr Market. Let the magic of “compounding” take effect in the long run.